Any Amendments To CA Online Poker Bill Must Be Included By August 19

Online Poker Legislation In A State Of Flux As California Legislative Session Winds Down

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With reports of new suitability language having been drafted, online poker was rumored to be on the agenda of the California Assembly this week.

Last week, Assemblyman Adam Gray’s Chief of Staff Trent Hager told the Los Angeles Times the bill would be brought to the floor on Monday.

When Monday came and went without any action on the online poker bill, AB 2863, it was then reported that the bill would reach the floor on Thursday.

Hopes were raised when AB 2863 appeared on the Assembly file Thursday morning, but a lack of support for the bill (which requires a two-thirds vote to pass) led to the bill being passed over.

Time is running out

The legislature is quickly running out of time to pass an online poker bill in 2016.

A looming August 19 deadline would prevent the bill from being amended, so if the “new” version of the bill is not brought to the floor next week (the assembly typically votes on bills on Monday and Thursday) it’s more or less dead for 2016.

Technically, the legislature has until September 1 to pass legislation. But the only way this is going to happen is if they bring all of the disparate factions together (extremely unlikely), or if they go over or around one of the coalitions.

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Making sense of the coalitions

There are two main coalitions in California.

On one side you have the PokerStars coalition. This coalition is made up of PokerStars, along with tribes and card rooms that have entered into online poker partnership agreements with PokerStars. That keeps them in lockstep agreement when it comes to certain aspects of the bill.

The PokerStars coalition is made up of two tribes, three card rooms, and, of course, PokerStars. More specifically:

  • Morongo Band of Mission Indians
  • San Manuel Band of Mission Indians
  • Bicycle Casino
  • Gardens Casino
  • Commerce Casino

On the opposite side of the ledger stands the tribal coalition headed by the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians, which is seen as the obstructionist coalition. The Pechanga coalition is made up of seven tribes.

But there is also a third coalition; what has become known as the Coalition of the Willing.

The Coalition of the Willing is made up of many disparate entities: the horse racing industry, labor unions, Rincon Band of Luiseno Indians, Pala Band of Mission Indians, United Auburn Indian Community, North Fork Rancheria of Mono Indians, Sycuan Band of Kumeyaay Indians, and more than a dozen card rooms.

Since the horse racing subsidy was proposed earlier this year, the PokerStars coalition has been aligned with these other groups, as they all were willing to support the bill as written.

This seemed to present a unified front that could take on the Pechanga coalition.

But the Coalition of the Willing is a lot more complicated than the PokerStars and Pechanga coalitions. And the current suitability debate may test the resolve of these coalitions within the larger coalition that has been supporting AB 2863.

Suitability the last key obstacle

Suitability, if and how PokerStars should be prohibited from applying for an online poker license in California, is seen as the last remaining point of contention.

Nothing in the bill has been completely agreed to, as there is still some quibbling about tax rates and the size of the subsidy the horse racing industry will receive, but suitability is the only remaining issue where there are two diametrically opposed sides.

The Pechanga coalition wants PokerStars to face a sit-out period (rumored to now be five years) as well as pay a one-time fee (rumored to now be $20 million) when the sit-out period comes to an end.

The PokerStars coalition is seemingly willing to acquiesce to a one-time fee of $20 million in lieu of sitting out for five years, something to which the Coalition of the Willing has also agreed.

But they don’t have to.

The moving part

Along with horse racing and the unions, the Rincon, United Auburn, and Pala tribes (dubbed the RAP coalition), and the other tribes and card rooms in this loosely affiliated coalition are in the enviable position of not having to take a side on suitability language.

If some version of AB 2863 emerges that satisfies the Pechanga coalition, they could easily jump ship and support the bill even if it loses the support of the PokerStars coalition.

Essentially, they’re not tied to PokerStars, and can move to whichever side gives an online poker bill the best chance to pass. Two plausible scenarios:

  • AB 2863 with suitability language that prohibits PokerStars from applying for a license has the support of the Pechanga coalition and the Coalition of the Willing, but loses the support of the PokerStars Coalition.
  • AB 2863 with suitability language that allows PokerStars to apply for a license has the support of the PokerStars coalition and the Coalition of the Willing, but doesn’t have the support of the Pechanga coalition.

Ostensibly, the Coalition of the Willing would support the version of AB 2863 favored by PokerStars and its allies. But, it also seems likely they would also support the version of AB 2863 favored by Pechanga and its allies.

For the Willing, suitability is a moot point.

What this all means

If AB 2863 isn’t brought to the assembly floor in the next week or so, it would seem to indicate that both coalitions are capable of killing the bill — which is how this debate has been framed all along.

Based on AB 2863’s on-again, off-again status on the assembly calendar, this appears to be the case.

A version of AB 2863 from June would have allowed PokerStars to seek a license after paying a one-time fee.

This bill was supposed to be considered by the assembly prior to the legislature’s July recess, but was pulled from the agenda at the last minute, purportedly because it was 12 votes shy of the two-thirds majority it would have needed to pass the Assembly.

And on Thursday, AB 2863 (presumably with suitability language favored by the Pechanga coalition) was on the assembly agenda, but was passed over.

If a version of AB 2863 with suitability language requiring PokerStars to sit out for some period of time does make it to the assembly floor — something it’s unlikely to do without having the necessary votes in place to pass it — it would be bad news for PokerStars.

That likely means its coalition isn’t strong enough to stop an unfavorable bill, or more likely, members of the coalition have peeled off.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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